Price impacts: RCAUs, forage supplies

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Last week's USDA monthly and annual Crop Production reports indicated dairy producers in most areas of the country are in better shape regarding forage supplies than a year ago (see 2014 dairy forage situation off to a better start in most areas). On Jan. 14, USDA released it's monthly Feed Outlook report, providing some insights on the demand and cost sides of the hay and forage equation.

U.S. roughage-consuming animal units (RCAU) are estimated at 67.08 million in 2013/14, down slightly from 67.22 in 2012/13. Increased hay supplies, in combination with reduced RCAUs, will increase available stocks per unit, from 1.14 tons per unit in 2012/13 to 1.33 tons per unit in 2013/14. 

In addition to hay, many dairy producers will have access to greater supplies of other forages in 2014. U.S. corn silage production was estimated at 117.9 million tons in 2013, up 4% from 2012, the fourth-highest level of production on record, and the highest since 1981. Sorghum silage production experienced impressive year-to-year gains, up 31% from 2012, to 5.4 million tons in 2013. Corn and sorghum silage available per RCAU is estimated at 1.84 tons per unit, up from 1.75 tons per unit in 2012. 

It might be more than you needed to know, but USDA calculates RCAUs for all livestock that might consume roughages, assigning different factors for each species. For example, a dairy cow has the top RCAU of 1.0354, while a dairy heifer has a factor of 0.8150. Factors are also assigned for beef cattle, sheep and goats, horses, poultry and hogs.

So, 9.2 million dairy cows and 4.5 million replacement heifers (based on Jan. 2013 estimates) mean dairy cattle account for about 20% of all RCAUs in the United States (9.53 million RCAUs for dairy cows plus 3.67 million RCAUs for dairy heifers equals 13.20 million dairy RCAUs.

At least on a national average, hay prices have been coming down. The USDA National Ag Statistics Service December Agricultural Prices report indicated alfalfa hay prices had declined for eight consecutive months. December preliminary alfalfa hay prices averaged $187, down $1 from November. Compared to a month earlier, however, December alfalfa hay prices were higher in Arizona, Iowa, Kentucky, Minnesota, Montana, Oklahoma, Texas and Wisconsin. 

And, all hay and alfalfa hay prices remain higher than long-term trends. The December all-hay price at $168/ton is $47 higher than the 10-year average (2003-12) of $121/ton. The December alfalfa price, at $187/ton, is $30 lower than the comparable 2012 price, but $55 more than the 10-year average of $132/ton.



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